Don't Trust, Verify: Towards a Framework for the Greening of Bitcoin

TL;DR

This paper surveys existing sustainable Bitcoin accounting systems, analyzing their strengths and weaknesses, and proposes a pathway toward a standardized framework for accrediting green Bitcoin holdings amidst evolving eco-friendly mining practices.

Contribution

It provides a comprehensive review of current green Bitcoin accounting methods and suggests a structured approach for developing a standardized accreditation framework.

Findings

Existing systems vary in rigor and scope

Adoption of methane-based mining and FLR can reduce carbon footprint

A standardized framework is needed for credible green Bitcoin accreditation

Abstract

For more than a decade, Bitcoin has gained as much adoption as it has received criticism. Fundamentally, Bitcoin is under fire for the high carbon footprint that results from the energy-intensive proof-of-work (PoW) consensus algorithm. There is a trend however for Bitcoin mining to adopt a trajectory toward achieving carbon-negative status, notably due to the adoption of methane-based mining and mining-based flexible load response (FLR) to complement variable renewable energy (VRE) generation. Miners and electricity sellers may increase their profitability not only by taking advantage of excess energy, but also by selling green tokens to buyers interested in greening their portfolios. Nevertheless, a proper ''green Bitcoin'' accounting system requires a standard framework for the accreditation of sustainable bitcoin holdings. The proper way to build such a framework remains contested. In this paper, we survey the different sustainable Bitcoin accounting systems. Analyzing the various alternatives, we suggest a path forward.